ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
ROBERT W. LOSER II, JEFFREY A. MODISETT
PATRICK M. O'BRIEN, ATTORNEY GENERAL OF INDIANA
BRETT R. FLEITZ
STEERS SULLIVAN P.C. DAVID A. ARTHUR
Indianapolis, IN DEPUTY ATTORNEY GENERAL
NOT FOR PUBLICATION
In Bulkmatic Transp. Co. v. Department of State Revenue, slip op. 49T10-9508-TA- 00085 (Ind. Tax Ct. Feb. 13, 1998), this Court found that the Indiana General Assembly rendered
Ind. Code Ann. §§ 6-6-4.1-4(d), -4.5(d) (West Supp. 1997)See footnote
unconstitutional when it limited the
availability of the exemptions contained therein to only those motor carriers who use auxiliary or
"power take off" equipment (PTO equipment) in Indiana. The Court held that this "in Indiana"
limitation violates the Commerce Clause
of the United States Constitution.
U.S. Const. art. I, §
8, cl. 3
. In its petition for rehearing, the Department contends that the Court erred in holding that
Bulkmatic is entitled to a refund of taxes it paid under the unconstitutional law. The Department
argues that the words "in Indiana" may not be removed from the law without a declaration that
the entire statutory scheme was unconstitutional. Therefore, continues the Department, because
the entire scheme was unconstitutional, the exemption should not have been available to anyone
and therefore Bulkmatic is not entitled to a refund of taxes it paid. The Court disagrees with this
characterization of the Bulkmatic decision and DENIES the Department's petition for rehearing.
In its opinion, the Court determined only that limiting the availability of the exemption to only those motor carriers using PTO equipment in Indiana was unconstitutional. This Court expressed no opinion regarding any action that the Department or the Indiana General Assembly should take. If the Department chooses, it may give the exemption to all motor carriers equipped with PTO equipment regardless of where the motor carrier uses PTO equipment. In the alternative, the Department may decide that the proper course of action is to deny the exemption to all motor carriers. Regardless, this Court will not dictate the Department or the General Assembly's position. Once the Department or the General Assembly determines what it views as the appropriate course of action, taxpayers are free to appeal to this Court if they feel that those
actions are contrary to law.
All this having been said, the Department's argument that Bulkmatic is not entitled to a refund is misplaced. The United States Supreme Court has expressly ruled that where a state "penalizes taxpayers for failure to remit their taxes in a timely fashion, thus requiring them to pay first and obtain review of the tax's validity later in a refund action, the due process clause requires the State to afford taxpayers a meaningful opportunity to secure postpayment relief for taxes already paid pursuant to a tax scheme ultimately found unconstitutional." McKesson v. Division of Alcoholic Beverages & Tobacco Dep't Business Regulation of Florida, 496 U.S. 18, 22 (1990).
As recently as February 23, 1998 the Supreme Court reaffirmed its stance in McKesson in Newsweek, Inc. v. Florida Department of Revenue, 118 S. Ct. 904 (1998) (per curiam). In Newsweek, the Supreme Court overturned a Florida District Court of Appeals ruling that denied a taxpayer a refund. The District Court ruled that the taxpayer could have chosen a "predeprivation" remedy such as filing a tax appeal and paying the disputed amount to the Court instead of the state. However, the taxpayer chose to pay the tax, file a suit, and claim a refund. This is a "postdeprivation" remedy. The District Court concluded that due process was afforded because the taxpayer could have pursued a prepayment remedy but chose not to do so. Id. at 904.
The Supreme Court held that its opinion in Reich v. Collins, 513 U.S. 106 (1994), forbids "bait and switch" type practices where States appear to offer meaningful postdeprivation relief, and only after the disputed taxes have been paid, reveal that no such remedy exists. Newsweek, 118 S.Ct. at 905. The Department's argument that Bulkmatic is not entitled to a refund ignores
the clear command of McKesson and Newsweek. Therefore, it is without merit.
For the foregoing reasons, the Court DENIES the Department's petition for rehearing.
Thomas G. Fisher, Judge
Indiana Tax Court
Jeffrey A. Modisett
Attorney General of Indiana
By: David A. Arthur
Deputy Attorney General
Indiana Government Center South, 5th Floor
Indianapolis, Indiana 46204-2770
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